Looking for a silver lining in 2020? The RBA has delivered in the form of an historically-low cash rate of 0.10% (down from 0.25% last month). They’ve slashed the rate to help bolster our national economy as we navigate the continued impacts of the pandemic.
RBAs governor, Philip Lowe says the rate cut is intended to “support job creation and the recovery of the Australian economy from the pandemic”.
What does this mean if you’ve got a home loan?
Well, hopefully your lender will pass the cut on to you and you’ll pay less interest on your loan. While interest rates aren’t everything, a lower one is something you can leverage to:
- Pay back your loan sooner, or
- Reduce your fortnightly repayments
How likely is it that lenders will pass the rate cut on?
It depends. Some smaller, more agile lenders have already passed the rate cut on in full to their existing customers on variable interest rates. Whereas the Big 4 – ANZ, Commonwealth, NAB and Westpac – have announced changes to their fixed rate loans only (for new customers).
One thing is for sure: the home loan market is more competitive than ever. If your lender isn’t playing nice then it’s time to reassess your position. Complete our home loan health check to find out if you’re paying too much on your home loan.